Like a flag at half mast as frames click fast
- Where We Are
- What Was Important About Last Week
- What We Are Watching For This Week
- A Word On Discipline
Where We Are:
Taking a look at the broader market:
It feels great to be back writing this blog.
Price action over the past few weeks is telling us the up trend for the year is sputtering out.
With the Technology index pushing the lower levels of a channel that has provided a nice ride up, any clear break below may be a precursor for the rest of the market to follow.
Semiconductors have been an encouraging area, and with relative strength we have confidence it will help tech turn around.
Banks are an eyesore, as is Retail and the Bond Market.
With an inverted yield curve, one can’t help but believe the market will respond with lower prices. But we will let the market speak for itself.
Given recent choppy price action, and clear weakness settled in, it would be typical to see bullishness tested to some degree.
Institutional money flow suggests we’re in a well supported market.
We have responded with the green flag, and will continue to buy top stocks that meet our criteria.
Energy, Biotechnology, and select Tech areas pose buying opportunities.
Lower prices on the major indexes may be a reality in the coming weeks, but until we see a broader market breakdown we’re sticking with the buys.
It’s the individual Growth Stocks that keep the profits humming, not the greater market.
The Dow Industrial Average ($INDU),-1.04%, bullish pullback or bearish head-and-shoulders forming? The dominant trend is up with a nice consolidation present on the weekly chart.
The S&P 500 ($SPX), -1.53%, with a close below the 50-day average for the first time since last October, the bulls want this important low to be a new bottom on its dominant trend up. Further deterioration below the 50-day average will create clear technical weakness.
Nasdaq ($COMPQ), -1.81%, closing below its 50-day average for the first time in two-and-a-half months, the technical picture is on the cusp of becoming precarious.
Russell 2000 ($RUT), -1.09%, with a solid trend above its major moving averages, this is our leading major index and has a healthy look about it.
Volume indications over the past week shed light on modest distribution which is no big deal.
Key chart action for the week:
Charts courtesy of Stockcharts.com
The 10-year Note Yield ($tnx) is flirting with a five year downward trend line, if broken it will signal a significant change in trend for bonds that may be a precursor for equities.
The U.S. Dollar Index ($USD) is in bounce mode as it retraces to its 50-day moving average. The trend remains down.
The Gold Miners Index ($XAU) pulls back after an explosive run north.
The Dow Jones AIG Commodity Index ($DJAIG) is struggling to stay above its 50-day average to create a trend up.
Consumer Staples ($CMR) has broken a consolidation range to the downside and is challenging its 200-day average.
Consumer Cyclicals ($CYC) is trading under the 50-dau average, as it struggles with new highs on the year.
Technology ($DJUSTC) is challenging a lower channel line, which if clearly broken may be the first step in a new trend down.
The Semiconductor Index ($SOX) remain in a solid up trend.
Banks ($BKX) continues to trend down for the year and is trading below the 50 and above the 200-day averages.
Broker Dealers ($XBD) hit a new high for the week. Trend up.
Retail ($RLX) continues to slide for the year, and is trading below the 50 and above the 200-day averages.
Healthcare ($HCX) is attempting to establish a solid trend up. While above its 50 and 200 day averages, it remains below its 20-day.
Biotech ($BTK) pulled back modestly for the week while its trend remains up.
REIT’s ($DJR) continued to trend up for the week.
Homebuilders ($DJUSHB) are a clear pocket of weakness, below all its major moving averages.
Transportation ($TRAN) pulled back for the week though remains trend up.
Airlines ($XAL) struggles to come out of a multi-year lower base.
Defense ($DFX) hit a new high for the week.
Energy ($IXE) hit a new high. Trend up.
Oil Services ($OSX)
Utilities ($UTY) continue to slide, and are challenging a lower, multi-year channel line.
The top 10 industry groups from the 6 month RS screen are:
- DRUG DELIVERY
- INVESTMNT BROKERAGE-NA
- PRINTED CIRCUIT BOARDS
- BUILDING MATRLS WHOLES
- NETWORKING COMMUN DVCS
- INSURANCE BROKERS
- SEMICONDUCTOR EQUIP MA
- GENERAL ENTERTAINMENT
What Was Important About Last Week
- AMZN delivered disappointing Q4 earnings.
- WMT announced preliminary January same-store sales growth of 4.7%, which is at the high end of its 3-5% forecast.
- SYY, TSN, CMI, EK, and SGP fell short of earnings expectations.
- XOM reported record Q4 profit; SII, JBHT, and MAT also exceeded expectations.
- Fed raises rates 25 bp to 4.50%; statement drops “measured” language but says some further policy firming may be needed
- The unemployment rate was 4.7% in January (consensus 4.9%).
- January non-farm payrolls rose 193K (consensus 250K), and is consistent with expectations of 3.5% Q1 real GDP growth.
- Hourly earnings rose 0.4% (consensus 0.3%) in January; December was revised to 0.4% from 0.3%.
What We’re Looking For This Week
Key earnings releases:
- MONDAY: Activision (ATVI), CNET Networks, Inc. (CNET), Hasbro, Inc. (HAS), j2 Global Communications (JCOM), LifePoint Hospitals, Inc. (LPNT), Randgold Resources Limited (GOLD), Ryanair Holdings (RYAAY), SOHU.com (SOHU), Walt Disney (DIS), Yum! Brands, Inc. (YUM).
- TUESDAY: Alcan Inc. (AL), Barr Pharmaceuticals, Inc. (BRL), Boston Scientific Corporation (BSX), Cisco Systems (CSCO), Fortune Brands (FO), Occidental Petroleum Corporation (OXY), The Cheesecake Factory (CAKE), The Coca-Cola Company (KO), Ultra Petroleum Corp (UPL), Yell Group (YELL).
- WEDNESDAY: Akamai Technologies Inc. (AKAM), Applebee’s International (APPB), Cell Genesys (CEGE), Charles River Laboratories, Inc. (CRL), CIGNA (CI), Dean Foods (DF), InterActiveCorp (IACI), PepsiCo (PEP), Prudential Financial, Inc. (PRU), Quest Software Inc. (QSFT), Swift Energy (SFY), Whole Foods Market (WFMI), Zoom Technologies Inc. (ZOOM).
- THURSDAY: Aetna Inc. (AET), Biosite Incorporated (BSTE), Cognizant Technology Solutions (CTSH), Marriott International (MAR), TheStreet.com (TSCM), UTStarcom (UTSI).
- FRIDAY: Anglogold Ashanti Limited (AU), ARCH COAL INC (ACI), Coventry Health Care, Inc (CVH).
On the economic front we have potential market movers with:
- MONDAY: none
- TUESDAY: Consumer Credit
- WEDNESDAY: Crude Inventories
- THURSDAY: Initial Claims, Wholesale Inventories
- FRIDAY: Trade Balance, Treasury Budget
- The Growth Stock Landscape
- What We Like – What We Have
- This Week’s Scans: • SETUPS • BREAKOUTS • BASE BUILDING • SHORTS
This Week’s Word On Discipline:
“The discipline of desire is the background of character.” – John Locke <a href=”http://en.wikipedia.org/wiki/John_Locke